First, flip back one page. You're on the wrong drawing. Look at Fig. IH 475 on p. 74.
I'm not sure where your felt seal is coming from. Neither the tech drawings nor the parts catalog calls for one in there. The only felt seals I can think of, other than the rear main on the motor, on a C are the dust seals on the front wheels and out at the ends of the rear axles. It sure sounds like someone's been in there ahead of you trying to fix a leak.
Coming in from the outside, originally there was a seal, a bearing, a spacer/bushing and then another bearing.
That outer bearing, the first one you'd come to and see, will be a ball-bearing.
If you have trouble getting the second seal out, you can try getting a screw into it and pulling it by the screws (might take two or three to wiggle it) until she comes out.
As far as a fix . . . and assuming you have a leak . . .
The old original leather seals were double-lipped. The new ones aren't, and it's common to drive one in over the other. It doesn't alway make a good seal. The variable is where the wear from the old seals is on the shaft, and being able to get the new seals onto clean, unworn surfaces. Not being able to do so may be how your predecessor got the idea of trying the felt seal.
As a good fix, it might be worth putting a Speedi-sleeve on the shaft. I've scoured around and can't find a good dimension that you could use to order one. If nobody else here can come up with a measurement for you, it may mean pulling the shaft and having a machinist put his micrometer on it for you, but a Speedi-sleeve will give you a fresh surface for your seals (you'll still need two of the newer variety) to ride on the shaft. No felt seal outside them.
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